Investment Pitches

Pitch Summary:
Shares of Alphabet, the parent company of Google and YouTube, were strong during the quarter as the Department of Justice delivered favorable rulings on embedding Chrome as the default browser on phones and retaining the company’s current corporate structure with no need to divest divisions. Beyond its core ad and search businesses, Alphabet provides a full stack solution within AI: spanning research, infrastructure/data centers and integrated end products. Valuation remains reasonable, in our view, and the company continues to share its ample store of cash with investors through dividends and buybacks.

BSD Analysis:
Alphabet is still the most misunderstood megacap on the board. Investors obsess over AI cannibalizing Search while Google quietly integrates AI in ways that increase stickiness and push competitors further to the margins. Google Cloud is finally behaving like a grown-up — margins up, backlog exploding, and AI workloads driving utilization the company has been waiting a decade for. Meanwhile, Alphabet’s secret weapon isn’t Gemini or YouTube — it’s their control over the entire AI cost stack, from TPU silicon to data centers to software integration. That vertical integration is something no competitor can replicate without detonating their own P&L. Capex looks huge, but the returns look even bigger as model size and compute requirements soar. With buybacks shrinking the float and high-margin businesses still growing, Alphabet remains a monster compounder that the market keeps trying (and failing) to overthink.

Pitch Summary:
Oracle is one of the world’s largest independent enterprise software companies. The company reported a large increase in backlogs during the quarter, including a substantial, five-year cloud-computing contract with OpenAI. In addition to a significant near-term lift to Oracle’s top line from this contract, we expect margins on these revenues to expand over time.

BSD Analysis:
Oracle has gone full villain arc — from a dusty enterprise relic to one of the most aggressive arms dealers in the AI infrastructure war. OCI’s architecture is so optimized for high-performance AI workloads that hyperscalers are quietly shifting serious training volume to Oracle despite pretending they’re vendor-agnostic. The backlog is ballooning, data centers are popping up like mushrooms, and multi-year GPU cluster deals are locking in revenue visibility that would make most cloud providers jealous. Meanwhile, the legacy database and ERP businesses just keep throwing off cash, effectively funding Oracle’s AI push without stressing the system. The market still discounts Oracle because it isn’t “cool,” but cool doesn’t matter when you’re minting free cash flow and onboarding AI customers faster than the old cloud titans expected. Oracle isn’t following the AI wave — it’s riding right in the center of it. The rerating case here is far from finished.

Pitch Summary:
Waters is a leading manufacturer of analytical instruments, along with associated consumables and software, used to separate and identify chemical compounds, for customers in the biotech/pharma, materials, and food science end markets. Shares fell nearly 20% since Waters announced it was acquiring Becton-Dickinson’s (BD’s) Biosciences and Diagnostics business in mid-July. As owners of Becton-Dickinson, we believe the assets acquired by Waters are underappreciated in their own right and are a good strategic fit with Waters’ existing business.

BSD Analysis:
Waters remains one of the highest-quality franchises in analytical instrumentation, anchored by dominant positions in liquid chromatography and mass spectrometry. Its installed base, recurring consumables revenue, and deep entrenchment in regulated pharma workflows provide a long runway of durable cash generation. The recent acquisition of BD’s Biosciences and Diagnostics divisions was received poorly by the market—shares fell nearly 20%—reflecting concerns about integration risk, cyclicality in instrument demand, and Waters’ historical aversion to large-scale M&A. However, the acquired assets offer complementary capabilities in sample preparation, clinical diagnostics, and flow cytometry, broadening Waters’ exposure into faster-growing, clinically oriented adjacencies. Strategically, the deal diversifies the portfolio beyond pure analytical instruments and positions Waters to capture more of the bioprocessing and translational medicine value chain, where demand is structurally expanding. The businesses have strong recurring components and fit Waters’ premium pricing and service-driven operating model. While the transaction increases leverage and introduces execution complexity, it also enhances Waters’ long-term growth algorithm by adding end markets with higher clinical adoption and regulatory visibility. At current valuation levels, the market appears to be pricing in a worst-case integration scenario, creating potential upside if Waters successfully stabilizes margins and demonstrates early operating synergies.

Pitch Summary:
Ryan is a broker of specialty insurance, which is a fast-growing segment of the property & casualty insurance market. The company was founded in 2010 by Pat Ryan at age 72, two years after he retired as Aon’s founder, Chairman, and CEO. We think the management team is an A-rated group, and they are currently guiding the company through a high-growth phase with 2024 being the company’s biggest year yet for acquisitions. The stock sold off over 20% when the company incrementally cut its 2025 organic revenue guidance (from +11-13% to +9-11%) based on a down-cycle in the property insurance market. As is frequently the case, we’re willing to look through the transitory softness to establish a position in an excellent company.

BSD Analysis:
Ryan Specialty’s wholesale and MGA platform continues to capture share in the specialty insurance ecosystem, benefiting from a structural shift toward delegated underwriting and higher-complexity risks. Its asset-light model delivers consistently strong margins and high cash conversion, giving it a financial profile closer to a software distributor than a traditional broker. Hard-market conditions in several specialty lines provide a pricing tailwind, while the company’s focus on niche, underserved categories supports durable organic growth. RYAN’s scaled distribution, carrier relationships, and proprietary products create barriers to entry that smaller MGAs can’t overcome. Despite premium valuations, earnings visibility and long-term growth durability justify the setup. With strong execution and the specialty market still expanding, Ryan Specialty remains one of the cleanest growth stories in insurance services.

Pitch Summary:
Our investment in Cooper Companies builds our exposure to the vision care industry alongside our investment in Alcon. Like Alcon, Cooper is a leading manufacturer of contact lenses, an industry characterized by an oligopolistic structure with strong barriers to entry. The company has achieved consistent market share gains over the last 15+ years aided by its unique ability to offer both private label and branded contacts to large retailers. Recent share price weakness driven by transitory issues in the contact lens business created an attractive opportunity to initiate a position.

BSD Analysis:
Cooper Companies continues to benefit from entrenched leadership in specialty contact lenses and a widening presence in women’s health, creating a diversified, cash-generative portfolio that compounds quietly. CooperVision’s share gains are driven by its strength in toric and multifocal lenses, categories with structural pricing power and sticky practitioner relationships. Meanwhile, CooperSurgical is recovering from past volatility, and improving mix plus stronger execution should give margins room to lift. The company’s recurring-revenue profile and global distribution network create a defensive growth engine that tends to outperform across cycles. Although the stock has lagged, fundamentals remain intact and the long-term algorithm—mid-single-digit organic growth plus incremental margin expansion—looks underpriced. With regulatory noise fading and utilization trends stabilizing, COO screens like an underappreciated high-quality compounder.

Pitch Summary:
Spun off from Novartis in 2019, Alcon has a rich, 75-year history as a global leader in ocular health. The company commands supermajority market shares in optical surgical equipment and implantable premium intraocular lenses (IOLs) and is one of four companies that dominates the contact lens and over-the-counter vision care market. Alcon’s end markets are characterized by strong secular tailwinds, including an aging and wealthier population, increasing rates of myopia (nearsightedness) globally, and advances in technology and comfort that increase adoption of premium IOLs and daily/weekly contact lenses.

BSD Analysis:
Alcon remains the category leader in eye-care devices, with a resilient surgical franchise and a growing vision-care segment that together create one of the most durable revenue stacks in med-tech. The company’s premium IOL portfolio continues to gain share, supported by innovation cadence and surgeon loyalty built over decades. Margin expansion is steadily improving as supply-chain normalization and manufacturing efficiencies flow through, giving Alcon a clearer path toward mid-20s operating margins. Secular tailwinds—aging populations, rising refractive demand, and global underpenetration—provide a long runway for consistent mid-single-digit top-line growth. Despite this, the stock still trades below what you’d expect for a high-visibility, procedure-driven compounder with strong recurring revenue. As execution tightens and free-cash-flow conversion climbs, Alcon looks positioned for steady multiple expansion.

Pitch Summary:
Oracle shares appreciated sharply following the company’s fiscal first quarter earnings report. The company’s contracted backlog, which primarily reflects its cloud infrastructure business, grew substantially from $138B at the end of last quarter to $455B in the most recent quarter. As discussed in the Portfolio Activity section, much of this increase was related to one customer, which led to our decision to exit the position.

BSD Analysis:
Oracle has morphed from a legacy enterprise dinosaur into one of the most important infrastructure vendors in the AI arms race — a pivot the market is still underpricing. OCI’s architecture is purpose-built for high-performance AI workloads, and hyperscalers are quietly handing Oracle massive training clusters because the performance-per-dollar beats the incumbents. The backlog is exploding, multi-year commitments are stacking up, and the company’s data center buildout is happening at a pace that would’ve seemed insane five years ago. Meanwhile, the legacy software business keeps printing cash, effectively subsidizing Oracle’s AI land-grab without stressing the balance sheet. Margins are climbing, free cash flow is surging, and the valuation still sits at a discount to other AI infrastructure plays despite meaningfully better visibility. Oracle may not have the hype of a pure-play AI chip name, but it has something arguably more valuable: locked-in enterprise data and the infrastructure to weaponize it. This is a stealth AI giant hiding under an old-school ticker.

Pitch Summary:
RXO, Inc. (NYSE: RXO) has concealed the effects of its unsustainable operations by misleading investors about the strength of its digital freight platform. After spinning off from XPO Logistics, RXO portrayed itself as a tech-driven freight innovator, but in reality, its model remains a low-margin, commoditized brokerage with limited differentiation. The company has disguised the financial deterioration of acquired businesses through opaque segment reporting and aggressive accounting adjustments. Reported profitability depends on nonrecurring cost savings and temporary market dynamics, not durable competitive advantages. RXO’s so-called “digital platform” offers little beyond standard load-matching tools, while larger peers like C.H. Robinson and Uber Freight continue to capture share. Management’s narrative of tech-enabled growth obscures a structurally weak business tied to a cyclical freight downturn. As the cycle normalizes and one-time benefits fade, RXO’s earnings power will contract sharply. The stock’s valuation implies tech-like growth that is fundamentally incompatible with its declining core economics.

BSD Analysis:
RXO’s asset-light, technology-enabled truck brokerage model gives it scalability and capital efficiency, but that strength increasingly masks structural vulnerabilities. While management promotes the proprietary platform and carrier network as durable advantages, the core industry remains highly commoditized—pricing power is weak, and competition from both legacy brokers and nimble digital entrants is intense. Moreover, the firm’s heavy reliance on spot market volumes and volatile freight cycles makes its earnings inherently cyclical and potentially overstated during boom periods. The recent acquisition strategy—while boosting scale and giving headline metrics—introduces integration risks, cultural mis-alignments and may require continued goodwill impairments or synergy shortfalls. On the cost side, FX, driver wage inflation, insurance claims and regulatory overshoot are real headwinds that can erode margin even in benign demand environments. Additionally, the touted “digital freight” narrative may be over-hyped: the incremental margin uplift from tech is still modest relative to the freight pool’s investment needs and the expectations baked into the stock. From a valuation vantage, RXO appears to trade more like a high-growth tech platform than a freight broker exposed to macro and operational cyclicality. In sum, while the upside is non-trivial if RXO executes flawlessly and the freight market strengthens, the risk of downside is material if volume growth stalls, spot rate pressure persists or acquisition synergies disappoint.

Pitch Summary:
American Express is a must-own for long-term investors due to its unique business model that combines solid growth, a mega moat, and outstanding durability. The company's ability to monetize both sides of the transaction and continuously innovate its offerings positions it well for future growth.

BSD Analysis:
American Express's Q3 results confirmed the bullish thesis with an 11% YoY revenue growth to $18.4 billion, surpassing consensus estimates. The company's focus on high-income individuals minimizes credit risk, while its premium, fee-based card offerings drive stable and recurring revenue. The recent refresh of its Platinum cards, with enhanced benefits, is expected to further accelerate growth in 2026. AmEx's pristine credit portfolio and strong engagement from Millennials and Gen Z indicate a robust future. Despite near-term operational headwinds, the company maintains expanding margins and strong execution, making it a dependable long-term compounder.